Estímulo – an impact manager that was born as a relief fund during the pandemic – is raising funds to provide credit to micro and small businesses that were affected by the floods in Rio Grande do Sul and are currently struggling to access capital.
The goal is to raise R$ 50 million for an FIDC, which will provide loans at subsidized rates.
The interest rate will be 0.99% per month, without the need for any collateral. For comparison: if a company with this profile were to get a bank loan, the rate would not be less than 4% per month.
Vinicius Poit, the CEO of Estímulo, told Brazil Journal that donors such as Itaú, Banrisul, the Gerdau family, and Reconstrói – the Ling family’s project to finance the state’s reconstruction – have already committed to contribute R$ 40 million.
These resources are being donated and will be allocated to the subordinated quota of the FIDC (with higher risk). In the future, Estímulo may raise funds with investors for senior quotas, which will function as a traditional investment.
“It is a model of blended finance, where part of the resources remains in the subordinated quota, without any return commitment, and part is in the senior quota, with the commitment to provide return to investors,” said Poit.
According to him, the idea is for the fund to initially focus on the recovery of Rio Grande do Sul, but also to be the seed of a large fund for disaster relief. “This was not the first and will not be the last disaster. On the contrary, with climate change, they are only expected to increase,” said Poit.
The situation of small entrepreneurs in Rio Grande do Sul is still very critical – even five months after the disaster – and aid has been decreasing over time.
“During a tragedy, many people mobilize, but as time passes, the topic cools off, and people’s daily lives are taken over by other events,” Poit said.
Gaúcho entrepreneurs struggle to access credit because they lack guarantees to provide to banks. The few who manage to do so have to pay very high interest rates or go through extensive bureaucracy – at a time when they need to quickly resume their activities.
The fund’s goal – named Retomada RS – is to lend to a thousand companies in the first stage, with an average ticket of R$ 50,000, a three-year term, and a six-month grace period.
Estímulo already has another fund operating in a similar format, born from the initial donations made during the pandemic.
The initial resources – loaned to companies affected by COVID-19 – had a very low default rate, less than 3%, and returned to Estímulo’s coffers at the end of the contracts, which had an average duration of 2 years.
“When the money from that first round returned, we talked to the donors about what to do with that money, whether we were going to return it all… everyone said no, that we should continue,” Poit said.
At that time, Galápagos volunteered to create an FIDC for the association, giving rise to this first fund – expected to close the year with almost R$ 100 million; half of the money is in subordinated quotas (donations), and half in senior quotas (investments).
Even with subsidized interest rates (the average of this first fund is 1.7% per month), the fund has yielded positive results.
According to Poit, the portfolio has a ‘over 90’ default rate of 7.5%. “The interest rate covers this default rate and still leaves about 15% to compensate the investor of the senior quotas and cover other costs,” he said.
This fund continues to lend only to micro and small companies, with three main focuses: allocating part of the resources to locations in the Legal Amazon; seeking companies led by women; and encouraging the companies receiving credit to make sustainability commitments, reducing environmental impact.
“When you lend to a neighborhood grocery store in Manaus or Rio Branco, for example, you generate employment and prosperity in the Legal Amazon, which reduces the likelihood of people there cutting down trees or working in illegal mining,” said the CEO.
Currently, 12% of the funds lent by this fund are already in locations in the Legal Amazon.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
